Do not fail to listen to this one all the way through.It is on www.amcol.com Gives a great grasp of the products and the growth prospects. They look for 30% sales growth and 40% earnings growth for a long while to come!
As I listened to the CETCO presentation I was impressed by the fact that ACO is developing a substantial moat with their Environmental Division. Here are some of the factors that I believe are opening a moat between ACO and their competition:
1) Environmental Regulations Regarding Pollution and Erosion Control 2) Stategic Locations in Emerging Markets 3) Emergence and Acceptance of the Geosynthetic Products in Engineering 4) Increases in Nonnegotiated Contracts using Geosynthetic Products 5) Evolution of Company as a "Value Engineering" Entity 6) Severity of Potential Water Pollution Problems in Emerging Markets 7) Excellent R&D Providing and Improving Innovative Products 8) Increasing Focus on Company as a Service and Technical Provider 9) Large Patent Portfolio
I was particularly impressed with the ability of the company to manufactor and develop their products in new markets. The fact that they have been able to virtually eliminate their US exports to foreign markets while growing foreign sales to aproximately 2 to 80 million in ten years, speaks volumes about the quality of the management. They currently have six stategically located plants outside the US and plan on adding more. As they have moved in this direction they have eliminated the majority of competition leaving only the small localized businesses as their rivals.
I am also greatly impressed with the ability of management to integrate 25 separate businesses into a few coherent and efficient lines eg.(Lining,Waterproofing,Oil Services).
I strongly suggest that all current or potential shareholder take an hour and fifteen minutes and educate themselves about this great company. I listen to the presentation twice and still have much more to digest.
That was a very positive presentation. If they can deliver as implied, we may not have to drop to Old Guys $15 dollar price target. I would have expected oil prices to collapse by now, which would have been somewhat negative for oil services, etc., but that clearly hasn't happened. I guess that's why I don't play the oil futures market.
Old guy I hope you or someone else can help me with these notes about the environmental (CETCO) subsidiary. Oilfield services sales in '05 were 40 mil. Lot of incremental improvement in technology, cross fertilization. They plan to expand installation division, even internationally I think; however, there is a danger of competing with their own customers. International was 47% of CETCO sales. They have 50% of the bentonite "water proofing" (?)market (in US?), but only 10% of total water proofing market and increasingly geosynthetics substituting for compressed clay. Sales have benefited from the hurricanes, and effect lasts several years (surprising to me). Briefer on oilfield services said it was confusing, and he sure confused me. Labor is a problem, and they have greatly expanded recruitment efforts in that division.
Allow me to enlighten you - this market is segmented and very competitive. Cetco runs a lean outfit and they really don't have a sales mentality.
They struggle to hire top sales candidates because of their compensation package, for example Regional Mgrs don't have company cars, that's insane. They need to grow up in the area of sales leadership or companies like WR Grace will continue to kick their asses.